Colombo: Sri Lanka’s real gross domestic product (GDP) growth for 2022 is projected at 1 percent, according to the latest report released by the central bank.

The country’s economic growth was 3.7 percent in 2021 and per capita GDP was 3,815 U.S. dollars, which is to decline to 3,041 dollars in 2022.

“Sri Lanka’s economy is envisaged to grow modestly in the near term as the economy is to reset with a debt restructuring program and long-overdue structural reforms, alongside an economic adjustment program to be supported by the IMF, which is expected to facilitate the economy to gather momentum over the medium term,” the report said.

The central bank believes that the existing macroeconomic instability in the economy, which had developed from the increased vulnerabilities on both the external and fiscal fronts, rising social unrest and political instability, effects of the pandemic, the domestic energy crisis, and elevated commodity prices both globally and domestically will greatly dampen Sri Lanka’s growth in 2022.

“These will have lingering effects in the immediate future leading to a slowdown in growth,” the report said.

Economic growth is likely to further slow down due to the announcement that external debt servicing will be suspended for an interim period and the commitment to a debt restructuring program.

However, the central bank thinks that prudent macroeconomic policies aimed at stabilization of the domestic economy coupled with an IMF engagement, improved monetary and fiscal policy coordination, and envisaged reforms will increase the pace of growth over the medium term. (Xinhua)